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Puerto Rico's Leaders Agree to Heed Budget Commission    [

    Puerto Rico, Bankrupt American Island
    By Laurent Mauriac
    Libération

    Tuesday 09 May 2006

This dependency's paralysis provokes little response in the United States.

    An American territory with close to four million inhabitants has suspended all payments. Parts of public services have been shelved; schools have been closed, and close to 100,000 people have stopped working in the last week. Yet the situation barely provokes any response in the United States: no official reaction, very limited media coverage. The territory in question is not an American state, but an island with a weird status. Puerto Rico is part of the United States, but has its own flag, its constitution, and its own team at the Olympic Games. Its head of state is the President of the United States, but its citizens have no vote to elect him, even though they are American citizens and may move and work freely within American territory. Puerto Rico is a "commonwealth" of the United States, enjoying the same status as the Virgin Islands and Guam.

    Confrontation

    The crisis has been provoked by a dispute between the governor and the legislature over the establishment of a consumption tax that would allow a new loan to be guaranteed. "More than anything else, the situation reveals the dysfunction of the island's government," deems Cesar Perales, president of the Puerto Rican Legal Defense and Education Fund, an association for the defense of Puerto Ricans' rights in the United States. "That's the consequence of a political confrontation between the two parties on the budget and taxation." Since the beginning of the blockage on May 1st, the public company for the promotion of tourism has assured that the island is "always open for tourism" in unchanged conditions of "security and comfort." Since then, demonstrations in the island's principal city, San Juan, follow one another in rapid succession.

    The absence of almost any discussion of the situation in the United States doesn't surprise Rodolfo de la Garza, Political Science professor at Colombia University and a good expert on the island: "Puerto Rico has never interested the United Sates. The American public is not informed." This situation is linked to the island's status, which, according to the professor, is an example, "of the worst kind of colonialism."

    Status Quo

    Nonetheless, several referendums organized in the last twenty years demonstrate that the majority of residents support the status quo, closely followed by those who hope the island will become an American state. Pro-independence supporters constitute a small minority who fear such an integration more than anything else.

    "Many people believe that if Puerto Rico became an American state, they would lose their identity," explains Cesar Perales. And so they make do with this wonky status. "If you consider that it's the poorest place in the United States, you could think it doesn't work," he judges. "But if you observe that Puerto Rico is in a better situation than the rest of Latin America, you tell yourself the opposite."

    Today, the United States meddles as little as possible in the island's affairs. And does nothing to resolve the present political-financial crisis. "An intervention would be possible if public health or security were threatened," Cesar Perales believes. "That's not the case today."

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    Translation: t r u t h o u t French language correspondent Leslie Thatcher.

 

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    Puerto Rico's Leaders Agree to Heed Budget Commission
    By Laura Perez Sanchez
    The Associated Press

    Wednesday 10 May 2006

Government officials in Puerto Rico have agreed to follow a panels' recommendations in an effort to end the island's fiscal crisis.

    San Juan - Puerto Rico's governor and congressional leaders have agreed to abide by recommendations of a commission created to solve a fiscal crisis that has partially closed the island's government and eroded its shaky credit rating.

    The announcement followed a decision by one of the major credit rating agencies to downgrade a key Puerto Rican bond to one notch above junk status.

    The commission - which consists of a former head of the island's Office of Management and Budget, a retired Supreme Court judge, an economist and an economic advisor to the legislature - will consider proposals to resolve the island's budget deficit and issue recommendations today.

    "We have agreed to accept the recommendations of this commission," Gov. Aníbal Acevedo Vilá said at a news conference Monday night with opposition leaders of the Senate and House of Representatives.

    The possibility of a resolution came eight days after the island's government ran out of money two months before the end of the fiscal year, forcing a partial government shutdown that halted many basic functions of the U.S. commonwealth.

    About 150 teachers blocked traffic Tuesday at a port in San Juan, and unions had planned demonstrations throughout the island, but some were called off after news spread of a possible solution.

    Moody's Investors Service cut the rating of Puerto Rico's general obligation bonds to "Baa3," the agency's lowest investment grade above junk status, affecting about $25 billion of government debt, the New York-based agency said.

    Puerto Rico is operating off its 2004 budget because the governor and the legislature failed to agree on spending plans for 2005 and 2006.

    "This action reflects the commonwealth's strained financial condition, and ongoing political conflict and lack of agreement . . . to end the government's multiyear trend of financial deterioration," Moody's said.

    The statement said Moody's was keeping Puerto Rico on a watch list for possible further downgrades.